The Cotonou Agreement, which was signed in June 2000, provides for the conclusion of WTO compatible trading arrangements and progressively removing trade barriers. In this regard, negotiations of EPAs would be undertaken with ACP countries that consider themselves willing to do so, at the level they deem appropriate and in accordance with the procedures agreed by the ACP group. ACP countries have advocated that the EPA negotiations should address the multi-dimensional nature of the development process of their economies, namely, poverty reduction, sustainable development, gradual and smooth integration of the ACP countries into the global economy.
Despite expressing these expectations, ACP countries have expressed fears that EPAs may result in massive revenue losses due to tariff reduction and the introduction of non-reciprocity. Developing countries continue to argue that such revenue losses would affect their national budgets, resulting in increased deficits, reduced spending on poverty reducing interventions in infrastructure, health care, education, safety nets amongst others, thereby exacerbating poverty. Impact assessment studies for selected ACP countries have shown that some of these countries will experience tariff reductions of between 15-60%.
These are serious concerns that should be given due consideration if EPAs are indeed expected to address the development challenge of ACP countries.
Past and current EPAs negotiations fail to disclose precisely how EPAs will practically attain human centred economic development for developing countries. Both the ACP and EU member States acknowledge that even if EPAs are going to be successful, this success will be borne through heavy costs of adjustment, however it is still not clear how these adjustment costs will be met.
Drawing from past experiences with Structural Adjustment Programmes (SAPs), it is feared that further trade liberalisation will result in a flood of cheap imports and unjust competition, thereby destroying 'infant' local industries and creating mass unemployment in the process.
The ACP countries acknowledge the potential adverse impacts of EPAs that will presumably override the positive aspects and erode any gains that ACP countries had realised under the ACP-EU partnership since the first Lome Convention. It would be ignorant not to give appropriate recognition to the Country Strategy Programmes being financed in selected ACP by the EU in the hope of promoting economic growth, development and poverty reduction. However, these will 'come to an end' in 2007 and very little if anything at all has been said about what will replace these programmes. Almost no additional funding has been promised to meet the adjustment costs, with the EU expected to most likely place more emphasis on the EU membership and the war in Iraq (the fight against terrorism) in terms of financing.
One of the greatest uncertainties of ACP countries in the negotiations of an EPA arrangement is the impact of these free trade agreements on regional integration. It has long since been recognised that grouping countries into larger economic negotiating blocks is an important basis for effective and sustainable development. However, there is speculation that EPAs may undermine regional integration. Already, the fragmentation of the SADC region during the negotiations reflects the destabilising element of EPAs on regional integration initiatives. Besides, it is still not clear how the SADC Trade Protocol will operate under or relate to the EPA framework.
Given these fears, there are two extreme notions about the EPA negotiations amongst stakeholders. One group argues that ACP countries should not have agreed to the EPAs negotiations and advocate for the withdrawal of ACP countries from the negotiations. This notion is strongly advocated for in the 'No to EPAs campaign'.
The EU strongly highlights that the need to negotiate EPAs is fundamentally based upon the need for bilateral trade agreements to be WTO compatible. In addition, the EU argues that non-reciprocity has failed to deliver the expected results of social and economic development. The proponents of EPAs continue to point out that EPAs are indeed the solution to the developmental crisis in ACP countries.
Thomas Deve is a Project Officer in the Linkages and Networks Unit at MWENGO.